Developments in financial markets can have broad economic effects felt by many outside the markets.

The sources of deflation are not a mystery. Deflation is in almost all cases a side effect of a collapse of aggregate demand.. a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers.

The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.

The basic prescription for preventing deflation is therefore straightforward, at least in principle: Use monetary and fiscal policy as needed to support aggregate spending, in a manner as nearly consistent as possible with full utilization of economic resources and low and stable inflation. In other words, the best way to get out of trouble is not to get into it in the first place.

The GSEs are adequately capitalized. They are in no danger of failing.

Developments in financial markets can have broad economic effects felt by many outside the markets.

I am very proud of my nerd-dom.